Booming Indian startup industry fails to fill policy void

There is a genuine need for the government to build an agency to hear and resolve local internet entrepreneurs’ concerns, said Sharad Sharma, governing council member of iSPIRT, a think tank for the software product industry.ET Bureau | December 20, 2016, 07:46 IST

BENGALURU: More than 120 startups have been created by former employees of online shopping portal Flipkart and 36 by ex-employees of its subsidiary Myntra, according to the Tracxn database.

The Flipkart economy of 156 startups is a microcosm of the local ecommerce ecosystem that has bloomed in less than 10 years thanks to $16 billion foreign capital that’s flowed into India. Similarly, Snapdeal has spawned 60 startups.

Yet, founders of domestic consumer-internet companies have failed to build a think tank or policy dialogue with the government, according to at least four persons who are board members of internet companies in India.

“It’s not about the colour of money—it is just about the amount of money,” said an industry veteran, referring to multinationals’ aggressive push into India. But the bigger concern for local entrepreneurs should be how to bridge their lack of knowledge in shaping public policy, compared with the experience MNCs have built in several markets.“Our entrepreneurs have been in extreme deficit when it comes to having a meaningful dialogue with the government,” said a venture capital partner in Bengaluru. “They didn’t understand the significance of a policy discourse, haven’t shown the maturity to deal with such complex environments which a Travis gets,” he said, referring to Uber founder Travis (Kalanick).

Uber, for example, recruited two graduates for Rs 25 lakh from National Law School in Bengaluru this year. “It is for research on public policy, so they are thinking not just about tech and business but how to influence public policy,” said a partner at a global consulting firm.

In contrast, the local internet companies have failed to build solidarity around tech entrepreneurs’ challenges on innovation, business and regulation. Even as late as January this year, at the Startup India launch organised by the central government, there appeared to be some degree of complacency among CEOs of the largest ecommerce companies amid talk of ‘digital colonisation’ at panel discussions.

This refers to the dominance of the world’s largest digital companies across markets. “If Uber and Amazon win in India, then the four dominant internet companies (including Google and Facebook) will all be of foreign origin,” said another industry voice.

“From a national policy perspective, there was no worry about digital colonisation. Even from a company strategy perspective, there was no worry because the local companies felt they were winning anyway.”

In this context, the recent remarks of Flipkart’s Sachin Bansal and Ola Cabs’ Bhavish Aggarwal red-flagging “capital dumping” and foreign companies’ India forays have been seen as reactive.

“It is a rearguard action, rather than with any cogent thinking behind it. They haven’t thought this through clearly,” said an industry source.

However, there is a genuine need for the government to build an agency to hear and resolve local internet entrepreneurs’ concerns, said Sharad Sharma, governing council member of iSPIRT, a think tank for the software product industry. “Today DIPP (department of industrial policy and promotion) looks out for the interests of MNCs. There is no government agency that provides comparable help to domestic technology startups which needs to be addressed,” he explained.

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